20 AS1 AD1 10 Real GDP 5 15 20 Consider only the short run. The economy was operating at point A at end of year 1. The real GDP decreased by 1 from year 1 to year 2. Suppose you know that the aggregate demand remained the same throughout this period, what is the change in aggregate supply? Price Level 15

20 AS1 AD1 10 Real GDP 5 15 20 Consider only the short run. The economy was operating at point A at end of year 1. The real GDP decreased by 1 from year 1 to year 2. Suppose you know that the aggregate demand remained the same throughout this period, what is the change in aggregate supply? Price Level 15

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Price level (GDP deflator, 2012=100) What happens in the economy when firms are no longer able to meet the demand for their output? Draw an aggregate demand curve. Label it AD. 135- Draw an aggregate supply curve. Label it AS. 125- Draw a point at the short-run macroeconomic equilibrium. Label it 1. Draw a point on the AS curve at which firms are unable to meet the demand for their output. Label it 2. 115- Prices When firms are unable to meet the demand for their output, 105- A. short-run aggregate supply is greater than long-run aggregate supply; rise 95- O B. the quantity of real GDP demanded is greater than the quantity of real GDP supplied; rise C. aggregate demand is greater than short-run aggregate supply; 85+ 18.0 19.0 20.0 21.0 22.0 rise Real GDP (trillions of 2012 dollars) D. the quantity of real GDP supplied is greater than the quantity of real GDP demanded; >>> Draw only the objects specified in the question. fall Click the graph, choose a tool in the palette and follow the…
Decide if the following events are Micro, shifting supply or demand, or Macro, shifting AD or AS. Give the direction in which the graph shifts. Aggregate Demand Supply Demand Situation Aggregate Supply Sales of Atlanta Braves gear grows with the success of the team. 1. The President and Congress pass a trillion dollar stimulus bill to provide aid during recession. 2. 3. Salmonella outbreak in peanut processing plants threatens lunches for school children. Pomegranates are shown to be cancer fighting superfoods. 4. Value of U.S. dollars declines, exports increase. 5. 6. Global oil prices tank as shale fracking surges. Housing market crashes. Federal 7. Reserve slashes interest rates. 8. House votes to block EPA regulations on coal fired electricity plants.
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on Indicate whether the following factor will affect aggregate demand (AD) or aggregate supply (AS) and whether the effect would be an increase or a decrease. Then indicate what will happen to the price level and the level of Real GDP and what type of equilibrium will result assuming that the economy is initially in long-run equilibrium. a) A decrease in the nominal wage rate. b) A decrease in exports. c) A decrease in the exchange rate. d) The discovery of vast new oil field in AD no effect decrease + increase no effect AS increase no effect increase increase decrease decrease decrease Real GDP increase decrease increase increase Equilibrium recessionary gap ⇒ inflationary gap inflationary gap inflationary gap AP ? Q Fir
Assume an economy operates in the intermediate range of its aggregate supply curve. State the direction of shift for the aggregate demand curve or aggregate supply curve for each of the following changes in conditions. What is the effect on the price level? On real GDP? On employment? a. The price of crude oil rises significantly (300%, say) raising the price of energy generally. b. Spending on national defense doubles. c. Investment spending falls as firms expect slower sales growth. d. An improvement in technology raises labor productivity. e. The United States raises exports of new passenger aircraft to China.